Over-Estimating Neoliberalism

Dillow’s analysis is spot on here. The conflation of markets with neoliberalism (and capitalism more generally) ignores the large state action that is taken to maintain such a settlement. Rather than market forces, which destroy profits and flatten and shrink firms, working, we see state intervention in limiting the movement of workers and their rights while guaranteeing capital a free ride through government spend soaking. Any talk of free markets is a fallacious attempt to legitimise state intervention and spending on the richest by talking of mystical market forces that have not been allowed to exist. (by the blog author)


by Chris Dillow

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2016/04/over-estimating-neoliberialism.html

George Monbiot says that the left hasn’t come to terms with “neoliberalism.” His piece shows why. It might be that “neoliberalism” is not so much a coherent intellectual project as a series of opportunistic ad hoc uses of capitalist power.

To see this, consider two paradoxes. Paradox one is that although the left sees neoliberalism as the dominant ideology of our times, very few people actually claim to be neoliberals – aside, arguably, from a few Blairites and Economist writers. As an intellectual presence, neoliberalism is little more than well-connected trolling.

Paradox two is that whilst the left associates neoliberalism with free markets – as George says “it maintains that “the market” delivers benefits that could never be achieved by planning” – one feature of the neoliberal era has been the soaring wages of those claim to deny the power of markets. CEOs – who are in effect central planners – and financiers who aspire to beat the market have seen their pay increase massively since the 80s*. That’s not something that would have happened if market ideology has triumphed.

These two paradoxes have a simple solution. It lies in the fact that neoliberalism is NOT free market ideology. Here’s Ben Southwood:

Neoliberalism is comfortable with the state spending 40-50% of GDP, it is comfortable with minimum wages, redistribution, social insurance, state pensions and extensively-regulated finance.

And here – from a very different perspective – is Will Davies:

the state must be an active force, and cannot simply rely on ‘market forces’. This is where the distinction from Victorian liberalism is greatest…Arguably it is the managerial freedom of corporate and quasi-corporate actors which is maximized under applied neoliberalism, and not markets as such.

Most leftists, I reckon, would describe all the following as distinctively neoliberal policies: the smashing of trades unions; privatization; state subsidies and bail-outs of banks; crony capitalism and corporate welfare (what George calls “business takes the profits, the state keeps the risk”; the introduction of managerialism and academization into universities and schools; and the harsh policing of the unemployed.

What do they have in common? It’s certainly not free market ideology. Instead, it’s that all these policies enrich the already rich. Attacks on unions raise profit margins and bosses’ pay. Privatization expands the number of activities in which profits can be made; managerialism and academization enrich spivs and gobshites; and benefit sanctions help ensure that bosses get a steady supply of cheap labour if only by creating a culture of fear. Ben’s claim that neoliberalism is happy with a big state fits this pattern; big government spending helps to mitigate cyclical risk.

All this makes me suspect that those leftists who try to intellectualize neoliberalism and who talk of a “neoliberal project” are giving it too much credit – sometimes verging dangerously towards conspiracy theories.  Maybe there’s less here than meets the eye. Perhaps neoliberalism is simply what we get when the boss class exercises power over the state.

* In fact, most fund managers don’t beat the market; they make their money by asset-gathering (and perhaps darker practices) rather than asset management.

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